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Worthington reports fourth quarter fiscal 2021 results

By Reshma on Jun 24, 2021 | 03:34 AM IST

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Worthington Industries, Inc. [WOR] today reported net sales of $978.3 million and net earnings of $113.6 million, or $2.15 per diluted share, for its fiscal 2021 fourth quarter ended May 31, 2021. In the fourth quarter of fiscal 2020, the Company reported net sales of $611.6 million and net earnings of $16.2 million, or $0.29 per diluted share. Results in both the current and prior year quarters were impacted by certain unique items, as summarized in the table below.

“We had an exceptional fiscal 2021 generating record fourth quarter and annual earnings per share,” said Andy Rose, President and CEO.  “While we benefitted from rising steel prices, we also saw robust demand across most of our businesses and joint ventures.  I am very pleased with the way our teams executed this past year coming out of the pandemic, and I want to thank all of our employees for their hard work and continuing commitment to making the Company better and growing earnings for our shareholders.”

Consolidated Quarterly Results

Net sales for the fourth quarter of fiscal 2021 were $978.3 million compared to $611.6 million, an increase of 60% over the comparable quarter in the prior year. The increase was driven by overall volume improvements in both Steel Processing and Pressure Cylinders and higher average direct selling prices in Steel Processing.     

Gross margin increased $136.3 million over the prior year quarter to $226.1 million, primarily due to improved direct spreads in Steel Processing and the impact of higher overall volumes.

Operating income for the current quarter was $110.5 million, an increase of $104.1 million over the prior year quarter. The impact of higher gross margin was partially offset by higher SG&A expense, which was up $32.1 million, mostly due to higher profit sharing and bonus expense resulting from the significant increase in earnings.

Interest expense was $7.7 million in the current quarter, compared to $7.5 million in the prior year quarter. The increase was due primarily to higher average debt levels.

Equity income from unconsolidated joint ventures increased $25.1 million over the prior year quarter to $42.4 million on higher contributions from all joint ventures. The Company received cash distributions of $25.5 million from unconsolidated joint ventures during the quarter.

Income tax expense was $27.4 million in the current quarter compared to $5.8 million in the prior year quarter. The increase was driven by higher pre-tax earnings, partially offset by a discrete tax benefit realized in connection with the sale of the Company’s liquified petroleum gas (LPG) fuel storage business in Poland.   Tax expense in the current quarter reflects an annual effective rate of 19.6% compared to 25.1% for the prior year.

Balance Sheet

At quarter-end, total debt of $710.5 million was relatively consistent with debt at February 28, 2021, and the Company had $640.3 million of cash.

Quarterly Segment Results

Steel Processing’s net sales totaled $655.2 million, up 100%, or $327.0 million, over the comparable prior year quarter when COVID-19 related shutdowns significantly reduced demand. The increase in net sales was driven by higher average direct selling prices and higher volume. Operating income of $94.3 million was $96.1 million higher than the loss in the prior year quarter on improved direct spreads and the impact of higher volume. Direct spreads benefited from significant inventory holding gains, estimated to be $50.5 million in the current quarter compared to $0.6 million in the prior year quarter. The mix of direct versus toll tons processed was 48% to 52% in the current quarter, compared to 45% to 55% in the prior year quarter.

Pressure Cylinders’ net sales totaled $323.1 million, up 14%, or $40.2 million, over the comparable prior year quarter due to higher volumes in both the consumer and industrial products businesses. Operating income of $13.0 million was $0.5 million less than the prior year quarter. Excluding impairment and restructuring charges, operating income was up $9.3 million over the prior year quarter to $31.1 million, driven by higher volumes combined with the impact of divestitures of underperforming businesses completed earlier in the fiscal year.  



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